HSBC profits dip by 19 per cent - but it beats expectations anyway

Emma Haslett
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Pre-tax profits beat expectations (Source: Getty)

Shares in HSBC shot up this morning as it beat analyst expectations in the first quarter, despite reporting pre-tax profits were down by a fifth.

The figures

Shares in the lender rose 2.9 per cent to 663.6p after it posted figures showing reported profits before tax fell 19 per cent to $5bn (£4bn) in the three months to the end of March, down from $6.1bn during the same period last year.

On an adjusted basis, pre-tax profits rose $5.9bn, up 12 per cent on the same period last year (and compared with analyst expectations of $5.3bn).

Meanwhile, reported revenues fell 13 per cent to $13bn, which it attributed to currency differences and the comparison with last year, which included its Brazilian business.

Its common equity tier one ratio, a key measure of its financial health, rose to 14.3 per cent, from 13.6 per cent at the end of December.

Why it's interesting

What a difference a couple of months make: back in February, the lender unveiled full-year profits of $7.1bn, down a whopping 62 per cent on the year before, thanks to a slew of one-off hits, including the disposal of that Brazilian business, plus a $3.2bn impairment to goodwill.

Stuart Gulliver, the lender's chief executive, said today's figures were driven by strong performances in three out of four of its global businesses: global banking and markets, commercial banking and retail banking and wealth all did well out of rising interest rates, he said.

But lest we forget, the lender is still the subject of an investigation by the Financial Conduct Authority (FCA), which is looking into its compliance with UK money laundering regulations.

However, there was no update on its plans for Brexit, having hinted in its full-year results that it will shift 1,000 roles to Paris once the UK has left the European Union.

What HSBC said

Chief executive Stuart Gulliver said: "This is a good set of results. The increase in adjusted profit was driven by strong performances in three of our four global businesses."

In addition, we completed a $1bn buy-back, and made progress on our cost-saving programmes, giving us further confidence in our ability to hit the higher cost-saving target that we announced at our annual results.

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